Week 6.

Regional Integration
Objectives of the Organizations
Objectives of:
(a) OECS and CARICOM
(i) Functional cooperation;
(ii) Integration of the economies of member states;
(iii) Harmonization of foreign policy.

(b) The CARICOM Single Market

(I) free movement of goods and services; right of establishment;
(ii) Free movement of capital;
(iii) Free movement of skilled labor.

(c) The CARICOM Single Economy Harmonization of:

(i) Fiscal (tax) policies;
(ii) Monetary policies (including a single CARICOM currency);
(iii) External trade policy
(iv)Legislation (custom, companies);
(v) Sectoral policies in agriculture, manufacturing, fisheries.
(d) The Regional Development Fund

Promoting Regional Integration

Integration is partly a response to the fact that the many countries in the region, while being
separate entities, also share a number of common characteristics which ought to help them come
together and work together. There are factors that naturally draw countries together and also
common challenges, which they can face more effectively if working as a larger, single unit.
Domestic Factors
 Common languages
With the exception of Haiti and Suriname, member states of CARICOM use English as the
official language, which makes communication much easier.

 Common history and cultural heritage

The diversity of cultures within the region actually reflects a common history and heritage which
informs the establishment of values and goals that can be shared across territorial boundaries.

 Small population and economy

The small populations in the individual countries do not provide a sufficiently large market to
support continued development. Cooperation and integration in trade produces a larger, regional
market. A country with a small economy finds it difficult to influence international organizations
or larger, more developed nations and to avoid exploitation by large, international businesses.
Working together as a region helps to overcome these challenges.

 Limited physical resources

There are limited physical resources in the region and more effective use of these could be made
through seeking integration.

 Underdeveloped human resources

There are high levels of illiteracy and under – achievement in education across the region. It is
hard for individual countries to address these issues because of the difficulty in financially
supporting education through all the levels. Working together as a region means that some
facilities can be provided on a region – wide basis and be available for individuals from a
member state.

 Common social issues

There are common social issues, such as teenage pregnancy and drug and alcohol abuse, which
can be more effectively tackled on a regional basis due to joint funding and functional
cooperation.
External Factors
 Globalization
Globalization is a process that sees national economies, cultures and societies being drawn
together through transportation, communication and trade. Economic globalization is usually
associated with the reduction or removal of barriers to the flow of goods, services, capital and
labor across national boundaries. This can result in some companies becoming multinational,
doing business around the globe and having access to the whole world as their market. Caribbean
businesses need to be able to function across the region if they are to meet this challenge and
complete in this global market.

 Trade liberalization
Trade has been liberalized around the world. Caribbean governments are no longer able to
restrict imports from outside the region in order to protect local producers and manufacturers.
The peoples of the Caribbean need to be encouraged to support these local and regional
producers and manufacturers so that they survive and continue to contribute to the region’s
economic development.
The difficulties with trade liberalization arise because smaller, poorer countries have to
compete in the same markets with and on the same terms as larger, richer, more
industrialized and developed countries. The economies of scale utilized by these larger
countries are not available for small countries. This hope is that regional integration will help
in this regard.

 Trade blocs
Trading blocs are institutions made up of a number of countries, who share the same
economic and political aims, which are linked by a system of special trading arrangements.
The European Union (EU) and the Free Trade Area of the Americas (FTAA) are two
examples of such trading blocs.

 Economic shocks
The countries of the Caribbean are vulnerable to economic shocks, which are unexpected or
unpredictable events from outside an economy that affect that economy. An example might be a
sudden or dramatic fall in demand for a particular produce or a rapid rise in price of, or a
restriction to supply, a basic commodity such as oil.
  Natural disasters
The Caribbean is also vulnerable to natural disasters on a scale that can have a devastating effect
on a society and an economy. A country is unlikely to be able to overcome the problems caused
by such disasters alone and the recognition of this need for cooperation should encourage moves
to integration.

Key Points:
There are a number of factors that promote integration including:
 Common language
 Common history and heritage
 Small population and economies
 Limited resources
 Common local and international challenges
 Globalization, trade liberalization and trading blocs.